We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Beaten-Down Biotech Stocks to Buy for a Turnaround in 2024
Read MoreHide Full Article
The biotech sector took a beating in 2023. Rising interest rates and inflation, global supply chain constraints, recent bank failures and ongoing conflicts due to Russia-Ukraine and the Isael-Hamas wars increased broader economic uncertainty.
New drug approvals, pipeline progress and an increase in M&A activity were some of the positives in the sector in 2023. While companies engaged in making or developing COVID-19-related treatments continue to lose steam, the sector has started to discover its charm in obesity drugs, the demand and competition for which are expected to increase in 2024. The sector is also focused on bringing novel and innovative treatment opportunities for different diseases.
Here we discuss three drug/biotech stocks, which took a beating in 2023 but are likely to bounce back in 2024 based on anticipated regulatory approvals and/or positive pipeline updates. These are Sarepta Therapeutics (SRPT - Free Report) , Denali Therapeutics (DNLI - Free Report) and Verona Pharma (VRNA - Free Report) .
Sarepta Therapeutics
It has been a bumpy ride for Sarepta in 2023 despite obtaining accelerated approval from the FDA for Elevidys — the first-ever gene therapy in Duchenne muscular dystrophy (DMD) indication. In October, Sarepta reported topline data from the phase III EMBARK study, the proposed confirmatory study for full approval of Elevidys in DMD indication. The study failed to achieve its primary endpoint. Sarepta’s stock is down 30% year to date due to this negative update.
Despite the setback, the EMBARK study achieved statistical significance on all pre-specified key secondary endpoints, indicating that treatment with Elevidys modifies the course of DMD indication. Management claims to have shared these results with the FDA, who have confirmed that they are open to granting full approval to Elevidys across all age groups if supported by the data. At the time of granting accelerated approval, the FDA approved the therapy for use in patients aged 4 through 5 years. Sarepta intends to submit a regulatory filing with the FDA soon.
Sarepta commercially launched Elevidys in third-quarter 2023. Despite the setback in the EMBARK study, the company recorded $69.1 million in sales, which is encouraging for a newly-launched treatment.
Apart from Elevidys, Sarepta is working to introduce new gene therapy treatments in its portfolio. In this regard, it started two separate early-stage studies on novel gene therapy treatments targeting different muscular dystrophies, namely Limb-girdle muscular dystrophy (LGMD) type 2E/R4 and LGMD2B/R2 (dysferlinopathy).
Estimates for 2024 earnings have improved from a loss of 98 cents to earnings of $1.79 per share in the past 60 days.
Denali Therapeutics
Denali Therapeutics makes therapies targeting neurodegenerative diseases. In spite of collaborations with big-wig pharma giants for multiple pipeline candidates, the small biotech still remains vulnerable to pipeline setbacks. In the past few months, Takeda and Sanofi have stopped developing their respective Denali-partnered candidates in Alzheimer’s disease and cutaneous lupus erythematosus (CLE) indications.
Year to date, shares of Denali have lost 22.5%.
However, the company’s partnerships with Biogen and Sanofi remain intact for other indications.
Currently, Denali has two wholly-owned candidates in late-stage development programs — DNL310 (for MPS II (Hunter syndrome)) and DNL343 (for amyotrophic lateral sclerosis or ALS). The company is progressing well with the development of its partnered pipeline. In this regard, Denali is also advancing mid/late-stage programs on BIIB-122/DNL151 in Parkinson’s disease (partnered with Biogen) and SAR443820/DNL788 in ALS and multiple sclerosis (MS) indications (partnered with Sanofi).
Denali currently carries a Zacks Rank #2. Loss estimates for 2024 have narrowed down from a loss of $3.04 per share to $2.92 in the past 60 days.
Verona Pharma
Verona engages in developing therapies for treating chronic respiratory diseases. The company’s lead candidate is ensifentrine, which has the potential to become the first non-steroidal therapy for treating respiratory diseases that combines bronchodilator and anti-inflammatory activities in one molecule.
The FDA is currently reviewing Verona’s new drug application (NDA) filing, which seeks approval for ensifentrine for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD). This NDA is supported by data from late-stage studies, which have shown the potential of ensifentrine to improve lung function and disease symptoms. Treatment with the drug also exhibited a substantial reduction in the rate and risk of COPD exacerbations.
A final decision on the NDA is expected by Jun 26, 2024. If the NDA is approved, management expects ensifentrine to be the first novel mechanism available as COPD maintenance treatment in over 10 years and the company’s first marketed product. Per Verona, the FDA does not plan to hold an advisory committee meeting to discuss the NDA.
Image: Bigstock
3 Beaten-Down Biotech Stocks to Buy for a Turnaround in 2024
The biotech sector took a beating in 2023. Rising interest rates and inflation, global supply chain constraints, recent bank failures and ongoing conflicts due to Russia-Ukraine and the Isael-Hamas wars increased broader economic uncertainty.
New drug approvals, pipeline progress and an increase in M&A activity were some of the positives in the sector in 2023. While companies engaged in making or developing COVID-19-related treatments continue to lose steam, the sector has started to discover its charm in obesity drugs, the demand and competition for which are expected to increase in 2024. The sector is also focused on bringing novel and innovative treatment opportunities for different diseases.
Here we discuss three drug/biotech stocks, which took a beating in 2023 but are likely to bounce back in 2024 based on anticipated regulatory approvals and/or positive pipeline updates. These are Sarepta Therapeutics (SRPT - Free Report) , Denali Therapeutics (DNLI - Free Report) and Verona Pharma (VRNA - Free Report) .
Sarepta Therapeutics
It has been a bumpy ride for Sarepta in 2023 despite obtaining accelerated approval from the FDA for Elevidys — the first-ever gene therapy in Duchenne muscular dystrophy (DMD) indication. In October, Sarepta reported topline data from the phase III EMBARK study, the proposed confirmatory study for full approval of Elevidys in DMD indication. The study failed to achieve its primary endpoint. Sarepta’s stock is down 30% year to date due to this negative update.
Despite the setback, the EMBARK study achieved statistical significance on all pre-specified key secondary endpoints, indicating that treatment with Elevidys modifies the course of DMD indication. Management claims to have shared these results with the FDA, who have confirmed that they are open to granting full approval to Elevidys across all age groups if supported by the data. At the time of granting accelerated approval, the FDA approved the therapy for use in patients aged 4 through 5 years. Sarepta intends to submit a regulatory filing with the FDA soon.
Sarepta commercially launched Elevidys in third-quarter 2023. Despite the setback in the EMBARK study, the company recorded $69.1 million in sales, which is encouraging for a newly-launched treatment.
Apart from Elevidys, Sarepta is working to introduce new gene therapy treatments in its portfolio. In this regard, it started two separate early-stage studies on novel gene therapy treatments targeting different muscular dystrophies, namely Limb-girdle muscular dystrophy (LGMD) type 2E/R4 and LGMD2B/R2 (dysferlinopathy).
Sarepta Therapeutics, Inc. Price
Sarepta Therapeutics, Inc. price | Sarepta Therapeutics, Inc. Quote
Sarepta currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for 2024 earnings have improved from a loss of 98 cents to earnings of $1.79 per share in the past 60 days.
Denali Therapeutics
Denali Therapeutics makes therapies targeting neurodegenerative diseases. In spite of collaborations with big-wig pharma giants for multiple pipeline candidates, the small biotech still remains vulnerable to pipeline setbacks. In the past few months, Takeda and Sanofi have stopped developing their respective Denali-partnered candidates in Alzheimer’s disease and cutaneous lupus erythematosus (CLE) indications.
Year to date, shares of Denali have lost 22.5%.
However, the company’s partnerships with Biogen and Sanofi remain intact for other indications.
Currently, Denali has two wholly-owned candidates in late-stage development programs — DNL310 (for MPS II (Hunter syndrome)) and DNL343 (for amyotrophic lateral sclerosis or ALS). The company is progressing well with the development of its partnered pipeline. In this regard, Denali is also advancing mid/late-stage programs on BIIB-122/DNL151 in Parkinson’s disease (partnered with Biogen) and SAR443820/DNL788 in ALS and multiple sclerosis (MS) indications (partnered with Sanofi).
Denali Therapeutics Inc. Price
Denali Therapeutics Inc. price | Denali Therapeutics Inc. Quote
Denali currently carries a Zacks Rank #2. Loss estimates for 2024 have narrowed down from a loss of $3.04 per share to $2.92 in the past 60 days.
Verona Pharma
Verona engages in developing therapies for treating chronic respiratory diseases. The company’s lead candidate is ensifentrine, which has the potential to become the first non-steroidal therapy for treating respiratory diseases that combines bronchodilator and anti-inflammatory activities in one molecule.
The FDA is currently reviewing Verona’s new drug application (NDA) filing, which seeks approval for ensifentrine for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD). This NDA is supported by data from late-stage studies, which have shown the potential of ensifentrine to improve lung function and disease symptoms. Treatment with the drug also exhibited a substantial reduction in the rate and risk of COPD exacerbations.
A final decision on the NDA is expected by Jun 26, 2024. If the NDA is approved, management expects ensifentrine to be the first novel mechanism available as COPD maintenance treatment in over 10 years and the company’s first marketed product. Per Verona, the FDA does not plan to hold an advisory committee meeting to discuss the NDA.
Verona’s shares have lost 37.4% in 2023.
Verona Pharma PLC American Depositary Share Price
Verona Pharma PLC American Depositary Share price | Verona Pharma PLC American Depositary Share Quote
The stock currently carries a Zacks Rank #2. In the past 60 days, loss estimates for 2024 have improved from $1.09 to 78 cents per share.